Bitcoin's Value: Beyond Market Fluctuations and the Price Tag

The value of bitcoin is often solely assessed by its worth, but fiat currencies are evaluated by a wide range of elements including usability and interest rates. Bitcoin should also be evaluated on a wider set of standards, such as its security, transaction speed, and ease of use.

Bitcoin's Value: Assessing a Digital Currency Beyond Its Price

In the realm of finance, fiat currencies undergo rigorous evaluation based on a myriad of factors, ranging from usability and trustworthiness to interest rates and demand. It is only fair that Bitcoin, the enigmatic digital currency, be subjected to a similarly comprehensive assessment.

Beyond Market Fluctuations

The media has often fixated on Bitcoin's value, reducing it to a mere metric that fluctuates with each market movement. Headlines trumpet the impact of milestones like the launch of ETFs, as if Bitcoin's worthiness were solely determined by its price on any given day. Such a narrow view is both simplistic and misleading.

In contrast, traditional currencies like the euro can experience significant fluctuations in value without undermining their validity as mediums of exchange. In November 2022, the euro depreciated by 7% against the US dollar, yet the currency's functionality remained intact. This is because the euro, even at a depreciated value, retains its utility as a convenient and widely accepted payment method.

A Multifaceted Appraisal

To truly assess Bitcoin's value, we must expand our perspective beyond price alone. Similar to fiat currencies, Bitcoin's worth can be measured through a range of indicators:

• Validator Fees: For network validators, Bitcoin's value is intertwined with gas fees, which represent the compensation they receive for maintaining the integrity of the network. Last year, gas fees reached an unprecedented high of $40, reflecting the surge in demand and transaction volumes.
• Security: The security of a currency is a crucial factor for businesses considering its adoption. In Bitcoin's case, security is related to the strength of its proof-of-work protocol, which has garnered attention from the US House Force as a potential foundation for national defense systems.
• Transaction Costs: Gas fees also serve as a gauge for the cost of transacting using Bitcoin. Higher gas fees indicate increased scrutiny and vigilance within the decentralized system, as well as heightened demand.
• Staking Interest: The advent of Bitcoin staking will introduce a new dimension to its value proposition: the potential to earn interest on dormant Bitcoin tokens. This feature, previously exclusive to other blockchains, allows Bitcoin holders to put their tokens to work and generate passive income.
• Layer-2 Technology: Bitcoin layer-2 technology will facilitate the staking of unused Bitcoin, enabling it to be put to work in a similar manner to fiat currencies in savings accounts. As more individuals recognize the utility of Bitcoin, the confidence in the currency will grow, leading to an increase in the Bitcoin interest rate.

The True Measure of Worth

Ultimately, the true measure of any currency lies in its usability – the ease with which it can facilitate the exchange of goods and services. Bitcoin is actively evolving towards enhanced ease of use, despite facing resistance from legacy actors such as regulators and central banks.

The remarkable aspect of Bitcoin is that it requires no mandatory adoption, no disclosure of personal information to third parties, and offers lower transaction costs than most fiat-based cross-border payments.

In the words of Mastercard's iconic slogan, for all these reasons, the true value of Bitcoin is "priceless."

About the Author

Jonathan is currently the Global Head of Growth at the Web3 ecosystem, Elastos. He oversees marketing, business development, investment, and ecosystem strategies. With a background in corporate communications and technology marketing, Jonathan has pivoted his focus to Web3 innovation through his roles at Elastos and CreDA.